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The Bank of England will be allowed to make US-style pledges to keep interest rates low as the Chancellor pins his hopes on monetary policy to fuel the economy.

In his first shake-up of Threadneedle Street’s remit since he came into power in 2010, George Osborne said that the Bank can offer “explicit forward guidance” to keep rates at a particular level for a number of months or years, as long as inflation remains under control. The policy is used by the US Federal Reserve, which has pledged to keep rates close to zero while unemployment remains above 6.5 per